Investment Rating - The report assigns a Neutral rating to Pop Mart with a 12-month price target of HK$260, indicating a downside potential of 7.4% from the current price of HK$280.80 [17][18]. Core Insights - Pop Mart reported a significant year-on-year revenue growth of 204% and a net profit increase of 396% for the first half of 2025, surpassing Goldman Sachs estimates by 1% and 10% respectively [1][4]. - The strong performance was driven by robust sales growth in both domestic (135% YoY) and overseas markets (440% YoY), with the overseas sales mix increasing to 40.3% from 22.7% in the previous year [2][10]. - The company's core operating profit margin (OPM) expanded by 17 percentage points year-on-year to 42%, attributed to a higher gross profit margin (GPM) and strong operational leverage [2][12]. Summary by Sections Financial Performance - Total sales reached Rmb 13,876 million in 1H25, slightly above Goldman Sachs estimates [4][16]. - Net income attributable to equity holders was Rmb 4,574 million, exceeding estimates by 10% [14][16]. - The gross profit margin was reported at 70.3%, above the expected 69.4% [13][16]. Sales Breakdown - Sales in the PRC increased by 135% YoY to Rmb 8,283 million, while overseas sales surged by 440% YoY to Rmb 5,593 million [10][11]. - Proprietary products sales grew by 214% YoY, with the Monsters IP sales increasing by 668% YoY to Rmb 4.8 billion, representing 35% of total sales [11][12]. Market Expansion - The number of retail stores in the PRC increased to 443, while overseas stores reached 128, with significant growth in the Americas [13][10]. - The company plans to continue expanding its store count, with guidance for over 100 new stores for the full year [3][10]. Future Outlook - The report emphasizes the importance of management's guidance update and strategies for IP portfolio expansion during the upcoming earnings meeting [2][3]. - Continued strong growth visibility into the second half of 2025 is expected, supported by the popularity of IPs and customer base expansion [2][3].

Investment Rating - The report maintains a Neutral rating for Cisco (CSCO) following its earnings report, with a downgrade to Neutral from a previous rating due to a significant miss in adjusted EBITDA and a below-expectations guidance [3][7]. Core Insights - Cisco's earnings report showed solid results but lacked significant surprises, leading to debates on whether it is a core long-term investment or likely to consolidate due to a lack of upward revisions [3][6]. - There are positive indicators for Cisco, including strong demand for WiFi 7 orders and a potential upgrade cycle for its enterprise campus products, which could provide tailwinds in the future [4][5]. - Investor sentiment around Nvidia (NVDA) remains high, with a notable increase in stock price since April, but recent performance has raised questions about its relative value and market positioning [12][13]. - The software sector is experiencing a cautious sentiment, with many stocks showing signs of being oversold, leading to frustration and confusion among investors regarding the lack of price support despite solid earnings [14][16][17]. - Apple (AAPL) has outperformed the Nasdaq 100 index recently, but September is historically a challenging month for the stock, raising concerns about future performance [19][20]. Summary by Sections Cisco (CSCO) - Cisco's Q4 EPS beat expectations by only 1%, the smallest percentage beat since April 2022, leading to discussions about its long-term viability as a core holding [3][6]. - The company is seeing early demand signals for campus refreshes, particularly with WiFi 7 orders increasing significantly [4][5]. - Security revenue growth was slightly below consensus, raising concerns about Cisco's ability to meet its previous outlook for security and observability [6][7]. Nvidia (NVDA) - Nvidia's stock has increased approximately 100% since April, but recent performance has lagged behind semiconductor indices, prompting discussions about its valuation [12][13]. - Investor confidence in the AI theme remains high, but there are tactical discussions about risk-reward dynamics ahead of upcoming earnings [12][19]. Software Sector - The software sector is currently viewed with caution, with many stocks experiencing significant declines and showing oversold conditions [14][16]. - There is a mix of sentiment among investors, ranging from frustration to optimism about potential opportunities in the sector [17][18]. Apple (AAPL) - Apple has recently outperformed the Nasdaq 100, but the upcoming September period is traditionally challenging for the stock, which could impact future performance [19][20]. Size Factor - The report highlights significant movements in the size factor, indicating notable volatility between small and large-cap stocks, marking one of the largest shifts in the past five years [21][22].

Investment Rating - The report maintains a "Buy" rating on CATL's A-Shares and downgrades H-Shares to "Neutral" based on valuation [1][15]. Core Insights - CATL's 2Q25 earnings exceeded expectations, with revenue of Rmb94 billion, an 8% year-over-year growth, and a net profit of Rmb16.5 billion, up 34% year-over-year [1][17]. - The battery unit gross profit (GP) showed mixed results, with a blended unit GP of Rmb135/kWh, slightly lower than Rmb136/kWh in 1Q25, indicating domestic market pressures [2][17]. - The report anticipates that the domestic EV battery unit GP will bottom out in 2026, a shift from the previous expectation of 2025 [2][29]. Financial Performance - CATL's 2Q25 results included a sales volume of approximately 150 GWh, a 34% increase year-over-year, but 5% below expectations [1][17]. - The company's total gross profit for 2Q25 was Rmb24 billion, missing estimates by Rmb2.3 billion, but offset by stronger financial gains and operating expense savings [1][17]. - The report revises earnings forecasts for 2025-2027 down by 1%, 5%, and 3% respectively, primarily due to lower battery unit GP assumptions [15][29]. Market Position and Strategy - CATL's capital expenditure (CAPEX) is expected to rise from 13% in 2024 to 24% in 2025, supporting market share gains [15][29]. - The company is leading in R&D for all-solid-state battery products, with small-scale production expected by 2027, although commercialization is still a few years away [15][29]. - The report highlights the installation of new battery technologies, including fast-charging LFP batteries and sodium-ion batteries, in the upcoming quarters [15][29]. Valuation Metrics - The 12-month price target for CATL's A-Shares is set at Rmb328, reflecting an 18.4% upside from the current price of Rmb277.09 [1][15]. - For H-Shares, the price target is raised to HK$436, indicating a 2.2% upside from the current price of HK$426.60 [1][15]. - The report provides various financial ratios, including a projected P/E ratio of 17.4 for 2024 and a dividend yield of 2.9% [4][9].

July 15, 2025 10:41 PM GMT Pop Mart | Asia Pacific 1H25 Prelims: Steepening S- Curve | What's Changed | | --- | Pop Mart International Group (9992.HK) From To Price Target HK$302.00 HK$365.00 Reaction to earnings Strengthens our thesis Meaningful upside Meaningful revision higher Impact to our thesis Financial results versus consensus Direction of next 12-month consensus EPS Source: Morgan Stanley Research Pop Mart International Group (9992.HK, 9992 HK) China/Hong Kong Consumer | China | Stock Rating | | | ...

Investment Rating - The report maintains a Neutral rating on Pop Mart (9992.HK) with a 12-month target price of HK$260.00, reflecting a downside of 1.2% from the current price of HK$263.20 [10][19]. Core Insights - Pop Mart's 1H25 profit alert indicates a sales increase of no less than 200% year-on-year, translating to at least Rmb13.7 billion in revenue, surpassing Goldman Sachs' estimate of 187% growth [1][15]. - The group profit is expected to rise by no less than 350% year-on-year, suggesting a net profit of Rmb4.5 billion in 1H25, which is above the previous estimate of Rmb3.8 billion [1][15]. - The robust performance is attributed to strong IP popularity, particularly the Labubu IP, and significant growth in both mainland China and overseas markets [2][3]. Financial Forecasts - Revenue projections for Pop Mart have been revised upwards for 2025-2027, with expected revenues of Rmb32.8 billion in 2025, Rmb42.3 billion in 2026, and Rmb49.1 billion in 2027, reflecting growth rates of 152%, 29%, and 16% respectively [5][16]. - The adjusted net profit for 2025 is forecasted at Rmb10 billion, indicating a growth of 213% [16]. - The report highlights a significant EBITDA growth forecast, with expected figures of Rmb14.8 billion in 2025 and Rmb22.7 billion in 2027 [5][10]. Market Performance - Pop Mart's stock has shown substantial price performance, with an absolute increase of 588.1% over the past 12 months [11]. - The company has a market capitalization of HK$350.6 billion and an enterprise value of HK$336.7 billion [5]. Growth and Margins - The report indicates a notable expansion in net profit margin (NPM), expected to reach around 30% in 1H25, compared to 20% in 1H24 and 26% in 2H24 [1][3]. - The EBITDA margin is projected to improve to 45.1% in 2025, with continued growth in subsequent years [10][13]. Strategic Outlook - The report emphasizes the importance of extending IP popularity beyond Labubu and expanding the product category to maintain growth momentum [3][20]. - The potential for further customer base expansion is highlighted as a key driver for future earnings growth [3][20].

Investment Rating - The report maintains a "Buy" rating for Giant Biogene Holding (2367.HK) with a 12-month price target of HK$71.00, indicating a potential upside of 25.1% from the current price of HK$56.75 [1][15][34]. Core Insights - Giant Biogene is expected to achieve a year-on-year sales growth of 23% to RMB3,116 million and a net income growth of 20% to RMB1,183 million for 1H25, with an adjusted net profit of RMB1,205 million, reflecting a 17% increase year-on-year when excluding ESOP expenses [1][18][20]. - The company is positioned to benefit from the upcycle in China's functional skincare market, leveraging its strengths in recombinant collagen and expanding its online presence through key brands Comfy and Collgene [37][38]. Summary by Sections Financial Performance - Revenue forecasts for 2025-2027 have been revised upwards by 0-2% due to more resilient margins and faster sales recovery than previously estimated [15][34]. - The expected gross profit margin (GPM), operating profit margin (OPM), and net profit margin (NPM) for 1H25 are projected at 81.7%, 41.3%, and 38.0% respectively [25][26]. Market Trends - Online gross merchandise volume (GMV) has shown a recovery trajectory, increasing by 58% year-on-year on Douyin as of July, significantly outperforming peers [2][31]. - The report highlights a minimal contribution from KOL livestreaming, which accounted for approximately 10% of sales on Douyin in July, down from 20% in the same period last year [2]. Brand Performance - The Comfy brand is anticipated to deliver 21% growth in online sales and 16% growth in offline sales for 1H25, while the Collgene brand is expected to grow by 70% online but decline by 5% offline [23][28]. - The report emphasizes the company's strategies to revitalize brand momentum, particularly in preparation for the Double 11 shopping festival [2].

Investment Rating - The report maintains a Neutral rating for Haidilao International Holding with a 12-month price target of HK$15.30, implying an upside potential of 8.4% from the current price of HK$14.12 [1][2][26]. Core Insights - The earnings forecasts for Haidilao have been revised down by 13%-16% for 2025-27, primarily due to lower-than-expected performance in 1H25, slower store expansion, and the company's strategy to offer better value to customers [2][23][27]. - The company is expected to experience a revenue decline of 4% year-on-year in 1H25, driven by weaker table turn performance and a decrease in party size, although a slight improvement in average selling price (ASP) may provide some offset [20][21]. - Despite the challenges in 1H25, the second half is anticipated to show a recovery in same-store sales growth (SSSG) due to an easier comparison base, which could lead to slight positive growth in average sales per store [2][22]. Summary by Sections Earnings Forecasts - The report projects a revenue of Rmb20.6 billion for 1H25, reflecting a 4% decline year-on-year, with restaurant revenue expected to drop by 6% [20][21]. - For 2025, total revenue is estimated at Rmb43.09 billion, down from the previous estimate of Rmb44.62 billion, marking a 3.4% reduction [25]. Margin Analysis - The gross profit margin (GPM) is expected to contract to 60.7% in 1H25, down from 61.0% in 1H24, due to increased food cost ratios and operating deleverage [1][21]. - Operating profit margin (OPM) is projected to decrease by 0.8 percentage points year-on-year to 11.8% [21]. Store Expansion and Performance - The company is expected to close 8 net stores in 1H25, indicating a cautious approach to expansion amid fluid consumption trends [20]. - The total store count for Haidilao is projected to decrease by 30 stores in 2025, with a total of 1,415 stores expected [25]. Valuation Metrics - The report provides a valuation of 16X for the 2025 estimated price-to-earnings (P/E) ratio, with a projected dividend yield of 6% [2][13]. - The adjusted EBITDA for 2025 is forecasted at Rmb8,063.4 million, reflecting a decline from previous estimates [25]. Key Focus Areas for Investors - Investors are advised to monitor the trends in table turn performance, store expansion plans, margin outlook, and the impact of delivery subsidies on overall performance [22][23].

Investment Rating - The report maintains a "Buy" rating for JD Health International (6618.HK) [1][21]. Core Insights - JD Health's share price has increased by 60% year-to-date, outperforming the Hang Seng Index and peers [1]. - The company is focusing on on-demand initiatives, market share growth, and disciplined capital allocation as key areas of interest [1][20]. - JD Health is expected to achieve 18% year-on-year topline growth for 2Q25, with a stable profit margin despite increased investments [20][24]. Summary by Sections On-Demand Initiatives - JD Health is rapidly expanding its preposition warehouses in tier-1 cities, targeting around 200 warehouses by the end of FY25 [2]. - The competition in the on-demand space remains disciplined, with JD Health focusing on quality and variety rather than aggressive sales volume increases [2][19]. - Higher investments and promotions are anticipated in the second half of FY25 to drive online-to-offline (O2O) growth [2][28]. Market Share and Growth - JD Health is gaining market share in the online drug category, with strong user engagement expected to drive traffic and transactions [3][19]. - The competitive landscape is evolving, with ongoing debates about B2C versus O2O competition in the pharmaceutical sector [3][19]. - The company is projected to outperform peers, with a diverging sales growth trend compared to competitors [21][27]. Financial Projections - Revenue forecasts for JD Health are set at RMB 58,159.9 million for FY24, increasing to RMB 88,638.8 million by FY27 [6][17]. - EBITDA is expected to grow significantly, with projections of RMB 1,684.2 million for FY24 and RMB 3,601.3 million for FY27 [6][17]. - The report anticipates a net profit of RMB 4,161.8 million for FY24, increasing to RMB 6,608.1 million by FY27 [17][39]. Capital Allocation - JD Health has over RMB 50 billion in net cash, representing approximately 50% of its market capitalization, which will be a focus in upcoming results [20][21]. - The company is expected to maintain a disciplined spending pattern while exploring opportunities for investments and shareholder returns [21][39].

Investment Rating - The report maintains a "Buy" rating for Laopu Gold (6181.HK) with a target price of HK$1,090, based on a 25x target P/E for 2027E [9][27]. Core Insights - Laopu Gold is expected to report significant growth in sales and net profit for 1H25, with forecasts of 268% and 284% year-over-year growth, respectively, reaching RMB12,963 million in sales and RMB2,259 million in net profit [1][17]. - The company is focusing on several key strategies for 2H25, including gross profit margin (GPM) management, store optimization, high ticket size SKU launches, and overseas expansion, particularly in Singapore [2][8]. - The GPM is projected to contract by 2.1 percentage points year-over-year to 39.3% due to raw material cost pressures, despite a price hike of less than 10% implemented earlier [8][24]. Summary by Sections Financial Performance - Laopu Gold's revenue is forecasted to grow from RMB8,505.6 million in 2024 to RMB27,121.8 million in 2025, with EBITDA expected to increase from RMB2,123.6 million to RMB6,603.5 million over the same period [4][28]. - The adjusted net profit for 1H25 is expected to be RMB2,409 million, reflecting a 294% increase year-over-year when excluding ESOP expenses [1][17]. Market Position and Strategy - The company is experiencing strong sales per store, with an average of RMB300 million, and a same-store sales growth (SSSG) of 150% [8]. - Laopu Gold plans to expand its store network, with new openings in key locations such as Shanghai and Singapore, which are anticipated to support additional SSSG [2][8]. Valuation Metrics - The report outlines various valuation metrics, including a P/E ratio of 14.1 for 2024, increasing to 29.6 for 2025, and a projected dividend yield of 5.2% for 2024 [4][9]. - The company’s financial returns are highlighted by a CROCI of 50.1% for 2024, indicating strong profitability relative to capital employed [4][9]. Growth Projections - The report anticipates continued growth in net income, projecting RMB4,733 million for 2025 and RMB6,623 million for 2026, with year-over-year growth rates of 221% and 40%, respectively [29]. - The expected margins for 1H25 include a gross profit margin of 39.3%, operating profit margin of 23.6%, and net profit margin of 17.4% [17][24].

Investment Rating - The report initiates coverage of Hengrui Pharma's H-shares and resumes coverage of A-shares, both with an Overweight (OW) rating, with H-shares being the preferred stock [1][43]. Core Insights - Hengrui Pharma is positioned to benefit from an improving domestic policy environment and accelerated globalization, which has not yet been fully reflected in the market [1]. - The company is recognized for its extensive and balanced product portfolio, with a strong pipeline across various therapeutic areas, including oncology, metabolic and cardiovascular diseases, immunology, and respiratory diseases [3][12]. - Hengrui is expected to receive approvals for 5, 5, and 11 new drugs in 2025, 2026, and 2027, respectively, totaling 47 NDA/BLA approvals from 2025 to 2027 [3][10]. Summary by Sections Market Potential - The global pharmaceutical market is valued at $1.47 trillion, approximately 6.6 times the size of the Chinese domestic market, with a projected CAGR of 5.7% from 2023 to 2028 [3][32]. - Hengrui has completed 14 licensing deals since 2018, with a total transaction value of $15 billion, indicating strong interest from global biopharma companies in assets from China [3][32]. Financial Projections - The target price for H-shares is HK$78, representing a 45% upside, while the target price for A-shares is RMB 71, representing a 37% upside [7][43]. - Revenue and net profit are projected to grow at CAGRs of 18% and 24%, respectively, from 2024 to 2027 [4][37]. - Innovative drug sales are expected to grow at a CAGR of 34% from 2024 to 2027, contributing to 74% of total drug sales by 2027 [38][40]. Product Pipeline - Hengrui has developed a comprehensive pipeline of innovative drugs, with a focus on key disease areas and a one-stop solution for various subtypes and treatment needs [19][21]. - The company is advancing multiple GLP-1 products targeting the $100 billion global diabetes market, with competitive clinical data supporting their efficacy [19][20]. Valuation Analysis - The DCF valuation method yields a target price of HK$78 for H-shares and RMB 71 for A-shares, with a reasonable premium due to Hengrui's leading position and growth potential [4][43]. - The SOTP analysis indicates that the contribution of globalization opportunities to total value is still conservative, accounting for only 13% of the total estimated value [4][43].